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Good morning,
Wika Beton: NDR Key
Takeaways
We brought Wika Beton (WTON IJ, BUY, TP:
IDR1,070) management for one day NDR to Hong Kong. Most of the clients we met
still positive on the overall Indonesia infrastructure story. The current
currency volatility as well as the recent escalation in political tension
appear to become the main concerns.
The key highlights:
¨ WTON management is
still positive on infra development on infrastructure development in
Indonesia as the progress and execution capabilities have been considerably
improved under the current government.
¨ WTON is confident to
exceed this year new contract target of IDR4.3trn. As of 10M16, the company
has secured IDR3.3trn worth of new contract and estimates to obtain around
IDR5trn by year end, mainly due to Balikpapan - Samarinda toll road project
¨ WTON expects to have
13%-15% GM vs 9M16 GM of 13.6%, while the management remain positive on the
new contract outlook next year and expect an increase of 25%YoY.
¨ High speed train
project will benefit WTON next year. The company will likely to receive
IDR1.5trn precast & ready-mix order from its parents Wijaya Karya (WIKA
IJ, BUY, TP IDR3,370) and to pursue another IDR1.5trn order from China party.
¨ They are confident
to compete with other precast players as they have more variety of products
and well known reputation in term of precast quality. However, we do
acknowledge the current stiffer competitive landscape especially from SOEs
such as Waskita Beton Precast (WSBP, NR).
We maintain our BUY call on the company as
we anticipate more new projects will be signed by year-end and will
likely be recognized as revenue next year. We expect stronger
year for WTON in FY17 underpin by the start of the HST project next year and
government’s bigger infrastructure budget in FY17F.
As one of the biggest suppliers of railway
sleepers in Indonesia, Wijaya Karya Beton (Wika Beton) will also benefit from
the Government’s plan to build 3,258km of railway tracks across the country
in five years.
Our TP of IDR1,070 is based on a DCF
valuation assuming the following: RF of 7.5%, WACC of 12.7% and TG of 5%. It
also implies 28.5x FY17F P/E. (Dony
Gunawan)
Link to WTON latest report: Wijaya Karya Beton : A Stellar Year
Link to daily report: Indonesia Morning Cuppa - 291116 |
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Media
Highlights:
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Corporates
Government
to allow securitization for infrastructure financing
Indonesia
state owned companies will be able to opt for asset securitization next year
to reduce their dependencies on the capital injection from government. The
securitization will support the government focus on infrastructure projects
that currently relying on the government’s cash strapped budget.
Securitization will allow the infrastructure projects to keep running with
the boost in SOEs’ funding for new projects.
The
government is currently aiming for 1,000km of new toll roads, 46 dams, 2,650
km of national roads and 13 airports by 2019 that will require IDR5.5
quadrillion in funding. The government estimates that it will only able to
fund a maximum 41% of the total fund needed.
Jasa
Marga will be among the first to proceed with securitization and may start as
early as January 2017. The company is aiming to generate IDR5trn from the
securitization. Jasa Marga will prepare its mature assets with steady cash
flow for the securitization.
Previously,
the government has prepared a regulation under the Presidential Decree no
1/2008, defining securitization as a transformation of illiquid assets to
become liquid by way of purchase of financial assets from originator and the
issuance of Asset Backed Securities (ABS).
Concurrently,
the Indonesia Financial Services Authority (OJK) has recently released a
regulation revision (POJK) for non-bank industries which regulates the
inclusion of infrastructure SOEs’ bonds as part of minimum government bonds
ownership regulation.
The
three main points of the POJK include:
1. Non-bank industries
to be able to invest in State and Provincial owned infrastructure
enterprises’ bonds, which the proceeds will be used for infrastructure
financing
2. The maximum
investment in the SOEs bonds is at
a. Maximum of 40% until
December 31st 2016
b. Maximum 50% after
December 31st 2016
3. The bonds have to be
registered in the Jakarta Stock Exchange or in electronic trading platform
with a minimum of investment grade rating
Ace Hardware to open another new store this month
Bank Tabungan Negara targets its
third-party funds to grow by 21-23% YoY next year
BCA Syariah is ready to expand to East
Indonesia
Lippo Cikarang generates USD29m from
selling apartment units at Newport Park
Pembangunan Perumahan set right issue price
at IDR3,250
United Tractors target IDR11trn revenue for
4Q16
Bakrie and Brothers to start the
development of its power plant
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Our
Recent Publication:
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Company Update: Adhi Karya Persero : The Train is Not Here Yet
Link to report: Adhi
Karya Persero : The Train is Not Here Yet
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Company Update: Bank Tabungan Pensiunan Nasional : Profitable
Bank With Appealing Valuation
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Sector Update:
Banks: New PRR Means More Flexibility For Banks
Link
to report: New
PRR Means More Flexibility For Banks
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Company Update: United Tractors : Weakening
IDR And Coal Price Recovery Play
Link to report: United
Tractors : Weakening IDR And Coal Price Recovery Play
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Sector Update:
Property: Stay The Course
Link
to report: Stay
The Course
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Non Rated Note: Ultrajaya Milk Industry
& Trading Co : Key Beneficiary Of Growing Milk Consumption
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Company Update: Indocement Tunggal
Prakarsa: May Face Headwinds From Higher Coal Prices
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Economic Highlights: BI Maintains The Key
Rate at 4.75%
Link to report: BI Maintains The Key
Rate at 4.75%
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Results Review: Indosat: Taking
The Lead In Data Monetisation
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Company Update: Bank Negara
Indonesia: Attractive Valuations With Strong Fundamentals
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Best regards,
Helmy Kristanto
Director
Head of Indonesia
Research
PT. RHB Securities Indonesia
